The 120-year-old locks-to-aerospace giant Godrej & Boyce has now entered the attainable premium furniture segment, targeting the millennials. BusinessLine caught up with company Chairman and MD Jamshyd Godrej to understand the rationale behind the foray, impact of GST and demonetisation and the entry of Swedish furniture giant IKEA into the Indian market. Excerpts:

What is the rationale behind launching another furniture brand – Script – under the Godrej & Boyce umbrella when you already have Interio?

The main differentiation is what we are offering through Script compared to what we have been offering at Interio. We are catering to a different segment.

Script is experiential and attainable premium brand targeted at millenials. If you need to reach out to those customers, you have to come out with a separate brand. It will help us increase (furniture) market share.

The ₹50,000-crore Indian furniture market is largely unorganised. Has anything changed post demonetisation and GST?

It is certainly helping the unorganised players. Smaller players can adapt well to GST. The market has improved and consolidation may start happening. GST rates have also been rationalised from 28 per cent to 18 per cent. Ultimately, there is a market that exists and GST brings about a level playing field for both organised and unorganised players. It is good for the consumer that we will have better designs and better quality products.

The second quarter GDP has shown improvement led my manufacturing. Is it sustainable or just the result of de-stocking post GST?

There are many factors involved. At the same time last year, there was demonetisation. There are a number of good factors: GST has settled down, it’s been a year since demonetisation and the global market is less jittery. There are good enough reasons for manufacturing and demand to return and we must focus on the fact that GDP grows because there is a pull for it and demand is coming from somewhere. This growth in some way represents everything that has happened. Also, as many commentators have said, it is hopefully bottoming out the decline that was taking place and we are going to see growth again.

How much will Godrej & Boyce invest in the furniture business in the next one year? And how does your furniture business growth rate compare with that of the industry?

We will invest ₹300 crore at the back-end in new factories, new processes, which will be common for both Interio and Script. For Script, there will be another ₹150 crore investment on the front-end. We will be present in Delhi, Mumbai and Bengaluru this fiscal and are targeting 18 stores in three years. Our furniture business is growing at 18 per cent, while the industry rate is about 8-10 per cent. We believe with infrastructure growth and expansion of reach, we will be able to continue our growth rate of higher-than-industry average.

Isn’t Swedish giant IKEA a competition for you, more for Interio than Script?

Yes, I think every new competitor who comes into the market gets a share. So clearly, IKEA will get a good share of the products it sells in India. Script is very different from what Ikea represents but Interio is similar in some ways and, yes, there will be competition. But the fact is that we are present in every district headquarter and that reach is going to help us. Moreover, Ikea doesn’t have its own manufacturing. It depends on suppliers. Our strength is that we have a lot of manufacturing processes in our control which gives us the ability to do things our way.

Related Topics